time for this baby to move, page-10

Essentially the wholesalers in one regard are like Woolies or Coles. The pharmacy clients are customers who can pick and choose who they use. Once upon a time, the wholesalers provided guarantees that made it hard if not impossible for a pharmacy to change.

The other tie up is with respect to marketing groups. Marketing groups are often branded/franchised and as such have a responsibility to support the wholesaler that is associated with the brand. However this responsibility is not always exclusive.

However not all marketing groups have a formal ownership by the wholesaler and not all marketing groups are branded but collections of independent pharmacies who trade as Joe blogs chemist for example.

Franchise management companies like Priceline, Terry White, Amcal, Guardian have closer relationships (or maybe owned and controlled by a wholesaler in some cases) with their primary wholesaler. Others such as Discount Drug stores, chemist warehouse may get a deal by negotiating for a fixed period and there has been much discussion on the impact on the wholesalers of offering extended credit etc.

Some marketing groups maybe 5, 20, or maybe many hundreds in number, may choose to negotiate a deal or tender to a wholesaler. The individual members who have joined the group do so to get market clout to get a similar deal to the branded franchises. If you are not happy with one wholesaler, there are two others who would like to have your business.

All wholesalers offer trading terms to get business. Trading terms are a discount for supporting them. If you support one wholesaler with 90 plus per cent of your purchases you may get a discount of x% on the costs of goods. What you buy from the other wholesalers may have no Discount.

API are negotiating with a large group and are being aggressive, how it all ends up is in the laps of the gods, or possibly in the hands of the three wholesalers. �You can read the link to the news story, but the impact depends if the number affected are a handful or hundreds.

API may keep all of the accounts involved and have a better margin even, or they lose the lot and the other wholesalers may enjoy improved economies of scale. I would not be prepared to guess either way.